Queries regarding F & O basic terminology

rahulchat · #31 28th October 2006, 10:22 AM

If you do not square off your position on the expiry day, the position will be closed out automatically at the last 30 minutes VWAP (Volume Weighted Average Price) on the Expiry.

E.g If you have a Nov Nifty Long position @3700, if you do not square off the position on or before 30 Nov (Expiry Date), on 30 Nov the position will be closed out at last 30 minutes VWAP (Volume Weighted Average Price) of the underlying Nifty (S&P CNX NIfty Spot), assuming that the VWAP on 30 Nov was 3750, on your position of Nov Nifty @ 3700 your accoubnt will be Credited with Rs 5000 i.e. (3750-3700)*100(Nifty Contract size)

Note: Above example does not account for Brokerage and other Charges.

beginner_av · #32 30th October 2006, 06:49 PM

LET ME REPEAT AGAIN...if its an option position, many brokerages DO NOT EXERCISE ur option by themselves unless u specifically instruct them...futures are settled automatically

rahulchat · #33 30th October 2006, 07:59 PM

At the expiry date, all In-the-Money Options are automatically exercised by the Exchange's system. Brokers only come into the picture if you desire to exercise ur In-the-Money stock option (OPTSTK) option before the expiry date, for exercising an option before the expiry an Ex Entry (Exercise Entry) has to be made by the Broker.

shamim · #34 15th November 2006, 10:18 AM

Hi Keertimannan,
For future reference, you can employ a strategy known as "Collar" to hedge against possible slide in stock and this does not require any additional funds other than commissions.
After you buy the stock, sell a call a couple of strike away. With the premium you receive from the call buy a put . The number of calls and puts bought will depend on the number of stocks you own. You would want to do this a few months out to give stock time to move. If the stock tanks, you may still lose a small amount but nothing catastrophic.
If the stock moves in your favor, you may have to manage the trade unless you want your stock called out.
I hope this helps some.

Similar Threads for: Queries regarding F & O basic terminology
Thread	Thread Starter	Forum	Replies	Last Post
Queries From "Teach a Man to..." thread!!	Alleppian	Technical Analysis	106	29th September 2008 06:52 AM
How to Use the Queries?	abhi_sh70	Equities	3	14th August 2006 06:14 PM
basic	kalskar	Introductions	1	27th March 2006 08:43 PM
Queries on BUY IN/ SELL OUT targets of your stocks	ravi t	Equities	649	31st October 2005 01:40 PM